Focus: Real estate oversupply

Too Much?

Jul. 11, 2021

In 2022, Qatar will host the most high-profile event the nation has ever seen—the FIFA World Cup. Unsurprisingly, since Qatar won the bidding in 2010, the country has been the scene of much construction of not only stadiums and public infrastructure but also private buildings such as malls, hotels, and entertainment centers. After all, those 1.7 million forecasted fans and spectators who make their way to Qatar to cheer their teams will need a sufficient number of hotel rooms, shopping centers, and eating establishments to keep them entertained in between the matches.

To make matters more challenging, Qatar's hot weather, even during the months of November and December—when the 2022 World Cup takes place—has necessitated an extra effort for the implementation of air conditioning systems in stadiums, hotels, and even certain public arenas. The use of such technologies will undoubtedly add to the already huge costs of construction for the hosting of the World Cup in 2022.

All this has prompted some to worry about the prospect of oversupply in the construction sector, reasoning that many of the stadiums, public infrastructure, and hotel rooms made specifically for the World Cup will be of little use once the event is over, and the happy champions of the event take their trophy home.

However, evidently Qatar has thought this through. All public construction proposals need to be reviewed by the country's Public Works Authority (Ashghal), and Ashghal has a tendency to give the go-ahead signal almost exclusively to those projects that can have a lasting contribution to society—with a particular emphasis on the beautification of Doha and other host cities. A more beautiful Doha will be just as pleasant to behold after 2022 as it will be during the tournament.

As a kind of preparation test for the 2022 event, on December 19, 2020, Qatar hosted the final match of the AFC Champions League between South Korea's Ulsan Hyundai FC and Iran's Persepolis FC in the newly constructed Al Janoub Stadium; media delegations and sportsmen from both sides were highly impressed by the quality of Al Janoub stadium as well as Qatar's all-inclusive and well-organized hosting of the event. Designed by celebrated British-Iraqi architect Zaha Hadid, Al Janoub and the seven other stadiums that will be inaugurated before the major tournament kicks off in November 2022, will serve as a useful legacy for Qatari residents.

Indeed, some public construction projects are already scheduled to continue their expansion after the FIFA World Cup. Such projects are generally public infrastructure such as Doha's tertiary hospital, or else mainly related to transportation such as the Sharq Crossing. Thus, the possibility of oversupply, at least in public construction, can be ruled out.
Then there are projects carried out by the private sector or as a public-private partnerships (PPP) that are rather different in nature. Such projects are designed to ride on the back of Qatar's rebranding after a glamorous hosting of the FIFA 2022 World Cup, which will keep the country's name in the news for a month or so and attract many visitors in the months and years following the tournament.

The Gewan Island project is a case in point. Its designers intend to create a mixed-use island by 2022, which upon completion, will have “586 apartment units ranging from one to four bedrooms, 101 public retail, entertainment and dining outlets, comprehensive leisure facilities for residents, and 1,456 underground car parks,” according to Gulf Times. In all likelihood, Gewan Island will continue to serve as a residential and entertainment district well after 2022.

The project is carried out by the United Development Company (UDC), a Qatari construction giant listed on the Qatar Exchange, which is known to be prudent enough to not invest in low-return enterprises. Ibrahim Jassim al-Othman, the company's CEO, told the Gulf Times in an interview in January that “We will continue with our efforts to deliver this pioneering project, which will open up new horizons for the development of modern cities in Qatar by creating residential, commercial and entertainment products and services that seek to enhance the quality of life.”

If this major enterprise is anything to go by, most of private and PPP constructions in Qatar are also smartly planned to be of some use after the tournament comes to a close on December 18, 2022. Far from creating an oversupply in the construction market, by implementing the right strategies and showcasing Qatar's outstanding qualities to the world during the World Cup, the hosting of the 2022 tournament will enhance the quality of life in Qatar and improve its standing as a major economic hub in the Gulf region.

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